Case Law Details
Brief Facts of the Case
The appellants are engaged in the activity of purification of excise duty paid Hexane and Petroleum Ether, which are supplied to them on free of costs basis by M/s. Merck Specialties Private Limited (for short, “M/s.Merck”). The appellants carry out purification, if required, on job work basis. During the relevant period, M/s. Merck purchased the above goods, namely, Hexane and Petroleum Ether from various suppliers and directed the suppliers to transport the said goods to the appellants. In addition M/s. Merck also supplied purified Hexane and Petroleum Ether to the appellants for laboratory testing and repacking purposes. The appellants have stated as to how the job work assigned to them has been carried out and they claimed that the process of purification of Hexane and Petroleum Ether as well as that of repacking from bulk to smaller/retail packs does not amount to “manufacture” within the meaning of Section 2(f) of the Central Excise Act, 1944. The appellants claimed that these purified Hexane and Petroleum Ether obtained from duty paid Hexane and Petroleum Ether are cleared from the factory of the appellants in the name of grades such as Guaranteed Reagent Hexane for Chromatography Lichrosolv grades.
Besides Hexane and Petroleum Ether, the appellants were also receiving some other chemicals for purification. M/s. Merck filed declaration under Rule 173C of the erstwhile Central Excise Rules, 1944 in the capacity of a principal manufacturer in the unit of the appellants. In the said declaration, the details of activity undertaken by the appellants on the duty paid Hexane and Petroleum Ether were furnished to the Department. The Revenue had relied upon the visit which was paid by the Superintendent of Central Excise, RangeIV, Belapur I Division. There was a communication dated 27th February, 2001 issued by the said Superintendent. The appellants point out that the above products were classified under SubHeading 27.10 of the Central Excise Tariff. The purified Hexane and Petroleum Benzine 6080 which were cleared by the appellants after repacking to M/s. Merck were also classified under this chapter of Central Excise Tariff. The appellants claimed to have replied to the letter of the Superintendent and made him known this entire process. They were of the view that the Department is satisfied with the explanation and no show cause notice was issued. However, despite such extensive correspondence carried out with the Revenue, the appellants were called upon to pay the duty on the ground that the processing activity carried out by using boiler, reactor etc. amounts to manufacture on account of which the duty demand was raised. This correspondence from March to May 2006 is relied upon. Equally this continued in the year 2007 as well. However, a show cause notice was issued and which resulted in an order of adjudication passed by the Commissioner of Central Excise, Belapur. He held that the activity of purification of Hexane and Petroleum Ether carried out by M/s. Bharat Dye Chem amounts to manufacture and thereby purified grades of Hexane and Petroleum Ether are required to pay duty. The case of that entity, namely, M/s. Bharat Dye Chem was relied upon to seek clarifications from the appellants and pursuant to the alleged nonsatisfaction of the Revenue even the appellants proceeded to receive a show cause notice dated. That show cause notice proposed to demand Central Excise duty under Section 11A (1) of the Central Excise Act, 1944. This was on the clearance of the purified Hexane and Petroleum Ether from January, 2003 to November, 2007. Even interest was also claimed and the notice also proposed to impose penalty.
The Appellate Tribunal passed an order and proceeded to uphold the claim of the Revenue. Aggrieved by the said order, the assessee filed the present appeal.
Contentions of the Assessee
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